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By Robert Hertzberg
View the methodology behind the CIOZone 100.
The 2009 CIOZone 100: How They Ranked
Technology's Top 100 by Sales: 21-40
Technology's Top 100 by Sales: 41-60
Technology's Top 100 by Sales: 61-80
Technology's Top 100 by Sales: 81-100
Upgrade cycles got cancelled. Consulting engagements were cut short. As for the "Vista bounce," forget about it-there wasn't one.
For the biggest U.S. technology vendors, 2008 ended terribly, with not just the economy, but the strength of the dollar, bringing growth to a halt. Between last year's second and fourth quarters, growth rates at capital-sensitive companies like EMC and big outsourcing companies like Accenture dropped precipitously or turned negative.
"In the first part of the year, these companies' revenues looked terrific," says Forrester Research vice president Andrew Bartels. "In the second half things fell apart."
Companies that sell a lot of hardware, like Hewlett-Packard and Dell, were particularly hard hit by the fall-off in business as the year went on. "Not upgrading hardware is the fastest way to cut costs," says Gartner vice president Ken McGee. "People were just holding tight." They still are, he adds.
Most technology companies had good enough results early in 2008 that they were still able to report revenue gains for the year. Collectively, revenue among the 100 biggest and most influential technology companies grew 9.4% to $701.9 billion from $641.8 billion in 2007.
Some of the growth among what we call the CIOZone 100-in the second year we have assembled this list-was due to acquisitions. Hewlett-Packard (No. 1 on our list, with $118.4 billion in revenue) wouldn't have grown almost 14% if it hadn't bought Electronic Data Systems (EDS). Nor would Oracle (No. 9) have reported a 17% sales increase without its acquisition of BEA, or SAP (No. 12) have reported a 13% jump without buying Business Objects.
"If you look at the vendors that didn't do acquisitions, they're more reflective of what's happening," says Bartels. For instance, without the benefit of a major acquisition, revenue at Intel (No. 6) fell 2% last year after growing 8.3% the year before. Revenue growth at Microsoft (No. 4) fell to 7.1% from 26% in 2007, when the new Vista operating system and a new version of Microsoft Office boosted results.
Companies have been slower to sign Microsoft's enterprise license agreements. The agreements confer rights to future Microsoft releases and access to the company's technical experts.
"Everybody I know is looking at their Microsoft enterprise agreement," says Peter Whatnell, chief information officer at Sunoco and president of the Society for Information Management, an industry association. While Sunoco, a $54 billion petroleum producer, is likely to upgrade many of its Microsoft products eventually, Whatnell sees no reason to rush. "I guess the question in my mind is whether it's more valuable to save $1 now and spend $1.20 in two years, or spend $1 now and save $1.20 in two years," he says.
The top of the list was strikingly similar to last year-an indication of how mature the technology industry has become. We added Accenture, replacing the acquired EDS (see the note on methodology), but otherwise the top 10 players were the same as in 2007 and appeared in almost the exact same order.
Next: Economic Slowdown Eats Into Profits
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